Read about the recent Delhi High Court ruling that clarifies the authority to issue Provisional Attachment Order under CGST Act. The court held that only a commissioner has the power to issue such an order and set aside a superintendent’s order to freeze a bank account.
Authority to issue Provisional Attachment Order under CGST Act is solely vested with the Commissioner
I. Introduction
A. Brief overview of the case
B. Explanation of the Provisional Attachment Order under CGST Act
II. Background
A. Facts of the case
B. Impugned communication by the Superintendent
III. Issue
A. Explanation of the issue before the court
B. Relevant legal provisions
IV. Ruling
A. Summary of the court’s decision
B. Analysis of the court’s reasoning
V. Conclusion
A. Recap of the main points
B. Implications of the ruling for future cases.
I. Introduction
In a recent ruling, the Hon’ble Delhi High Court in M/s Vikas Enterprises v. Commissioner of Central Tax (GST), Delhi North & Anr. [W.P.© 9495 of 2023 dated July 31, 2023] set aside a letter issued by the Superintendent instructing to freeze the bank account of the assessee. The court held that the power to issue an order of attachment of bank accounts under the Central Goods and Services Tax Act, 2017 (“the CGST Act”) is only with the Commissioner and not below the rank of Commissioner can pass such an order. Furthermore, the court imposed a cost of INR 5,000 on the Superintendent who issued such an order. This blog post will provide an overview of the case and its implications for future cases.
II. Background
M/s. Vikas Enterprises (“the Petitioner”) maintained a bank account with State Bank of India. The Branch Manager of the State Bank of India was served a communication dated March 03, 2022 (“the Impugned communication”) by the Superintendent Anti-Evasion directing to furnish certain bank documents pertaining to the Petitioner and further directed the bank not to permit any debit from the Petitioner’s bank account maintained with the said bank without prior permission of the Respondent.
The Petitioner filed a writ before the Hon’ble Delhi High Court.
The Petitioner relied upon the Judgement of Radha Krishan Industries v. State of Himachal Pradesh & Ors. [(2021) 6 SCC 771] wherein the Hon’ble Supreme Court held that an order under Section 83 of the CGST Act cannot be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue.
III. Issue
The issue before the court was whether a Superintendent has power to issue notice under Section 83 of the CGST Act to attach a bank account. Section 83 of the CGST Act deals with the provisional attachment of property, including bank accounts, to protect the interest of the Government revenue. The Petitioner argued that only a Commissioner has the authority to issue such an order, and not an officer below the rank of Commissioner.
IV. Ruling
The Hon’ble Delhi High Court in W.P.© 9495 of 2023 held as under:
- The court directed that, the Revenue Department is required to act by the statutory provisions.
- The court relied upon the Judgement of Radha Krishan Industries v. State of Himachal Pradesh & Ors. [(2021) 6 SCC 771] wherein the Hon’ble Supreme Court held that the power under Section 83 of the CGST Act can be exercised only subject to the conditions, as specified therein, being fully satisfied. No order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue.
- The court ordered to restore the bank account of a taxpayer wherein a directive was given by a superintendent.
- The court held that, the power to order attachment of bank accounts under the CGST Act is only on a commissioner.
- The court set aside the Impugned Communication to the extent that it seeks to place a debit freeze on the Petitioner’s account and imposed a cost of INR 5,000 on the Superintendent.
This ruling clarifies that only a commissioner has authority to issue Provisional Attachment Order under CGST Act and not below rank officers. It also serves as a reminder for officers to act within their statutory powers and not exceed their authority.
V. Conclusion
In conclusion, the recent ruling by the Delhi High Court in M/s Vikas Enterprises v. Commissioner of Central Tax (GST), Delhi North & Anr. [W.P.© 9495 of 2023 dated July 31, 2023] clarifies that only a commissioner has the authority to issue a Provisional Attachment Order under the CGST Act. The court set aside a letter issued by a superintendent instructing to freeze the bank account of the assessee and imposed a cost on the superintendent for exceeding his authority. This ruling serves as a reminder for officers to act within their statutory powers and not exceed their authority. It also has implications for future cases involving the attachment of bank accounts under the CGST Act.
DISCLAIMER: The views expressed are strictly of the author and TaxB.in. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
